Business Commons^™

Public Communication Of Audit Risks And Related-Party Transactions: Evidence From China, Ole-Kristian Hope, Heng Yue, Qinlin Zhong

Research Collection School Of Accountancy

This paper examines whether and how firms' engagement in related-party transactions (RPTs) is shaped by public communication of audit risks as required by the expanded audit report. Using the phased regulatory changes in China and a difference-in-differences design with firm fixed effects and matching, we find that firms significantly reduce their RPTs after the adoption of expanded audit reports (EARs). To investigate potential mechanisms, we find that (1) investor scrutiny increases after the adoption of EARs, (2) the reduction of RPTs is more pronounced when EARs are more likely to attract investor attention, and (3) the reduction of RPTs is …

Rule Violation And Time-To-Enforcement In Weak Institutional Environments: A Good Faith Perspective, Jun Xia, Yusi Jiang, Heli Wang, Yuan Li

Research Collection Lee Kong Chian School Of Business

Previous studies on corporate misconduct have focused mainly on preventing misconduct or remedying it after detection, but it remains unclear how misconduct can be effectively detected in the first place once it occurs. We apply the good faith perspective in the context of China, which represents a weak institutional environment, and argue that the ability of culpable leaders to conceal information may delay misconduct disclosure because such ability helps maintain the good faith of regulators. Moreover, we argue that because the regulators have faith in professionals (external auditors, institutional investors, and securities analysts) whose skills are in fact often underdeveloped …

Digital Wealth Management And Consumption: Micro Evidence From Individual Investments, Qian Gong, Mingyuan Ban, Yunjun Yu, Luying Wang, Yan Yuan

Research Collection Lee Kong Chian School Of Business

With the rapid advancement of digital finance in China, accessing wealth management services through digital platforms has become considerably convenient. However, the potential impact of digital platform investments on residents' consumption remains a relatively unexplored question. This study addresses this gap by leveraging a unique dataset obtained from one of China's largest fintech companies, encompassing individual-level data on consumption and investment. Our findings indicate that engaging in digital platform investments can indeed stimulate residents' consumption. Importantly, participation in digital platform investment has an inclusive effect, with a more pronounced marginal impact on consumption among low-income residents and in-dividuals residing in …

Why Do Farmers’ Cooperatives Fail In A Market Economy? Rediscovering Chayanov With The Chinese Experience, Zhanping Hu, Qian Forrest Zhang, John A. Donaldson

Research Collection School of Social Sciences

In The Theory of Peasant Cooperatives, Chayanov develops the theories of differential optima and vertical integration, which stress the vulnerability of peasant farming in capitalist markets, and argues that cooperatives can support smallholders only if they operate as ‘a cooperative movement’, are buttressed by a strong ‘cooperative culture’, and achieve ‘vertical integration’. Based on extensive fieldwork in China, we identify six major obstacles that explain the failure of most cooperatives. Chayanov’s arguments caution us to not only the vital importance of cooperatives to the resilience of peasant farming, but also the apparently insurmountable obstacles that cooperatives face in market economies.

Constrained By Localized Attention Focus: The Negative Effect Of Firm-Specific Knowledge On Exploratory Firm Innovation, Bilian Ni Sullivan, Kaixian Mao, Heli Wang

Research Collection Lee Kong Chian School Of Business

Integrating the resource-based view (RBV) and attention-based view (ABV), this study explores the impact of firm-specific knowledge (FSK) on a firm's exploratory innovation and the role of government support in this process. We argue that firms with a high degree of specificity in their knowledge assets tend to have a more localized attention focus, leading to those firms with less exposure to distant and diverse information and knowledge. Consequently, such firms are likely to have reduced exploratory innovative outputs. However, government resource support could expand a firm's attention focus beyond local searches, mitigating its negative effects. Based on a unique …

Geographic Distance And State's Grip: Information Asymmetry, State Inattention, And Firm Implementation Of State Policy, Xiyi Yang, Heli Wang, Xiaoyu Zhou

Research Collection Lee Kong Chian School Of Business

In this study, we develop the argument that geographic distance between the state and local governments undermines the state's capacity to influence the implementation of state policies by local organizations. Drawing from information economics and the attention-based view, we propose that physical distance reduces the state's monitoring effectiveness through two interrelated mechanisms: information asymmetry and state leaders' inattention to distant issues. Using data of Chinese public firms' implementation of environmental activities between 2008 and 2016, we find that firms conduct fewer environmental activities required by the state when they are regulated by local governments that are more geographically distant to …

Growing Up Under Mao And Deng: On The Ideological Determinants Of Corporate Policies, Hao Liang, Rong Wang, Haikun Zhu

Research Collection Lee Kong Chian School Of Business

Historically, economic activities have been organized around certain ideologies. We investigate the impact of politicians’ ideology on corporate policies by exploring a unique setting of ideological change—China from Mao to Deng around the 1978 economic reform—in a regression discontinuity framework. We find that the age discontinuity of politicians around 18 years old in 1978, who had already joined the Chinese Communist Party (CCP) or joined soon thereafter and later became municipal paramount leaders, has had a lasting effect on contemporary firm- and city-level policies. In particular, firms in cities with mayors that joined the CCP under the ideological regime of …

Friends Can Help: The Effects Of Relationship In The Chinese Book-Building Process, Ting Luo, Wei Luo, Heng Yue, Lu Zhang

Research Collection School Of Accountancy

Using detailed bidding information in Chinese IPO book-building process, we find that institutional investors who have a close relationship with the underwriter are more likely to participate in bidding and their bidding prices are higher, compared to other institutional investors. We also find that related institutional investors bid higher when the underwriter is more likely to need or receive their support. Further analysis suggests that related institutional investors gain some benefits for their support to the underwriter, including receiving more shares in profitable IPOs, better timing their exit from the IPO in the open market, and receiving more optimistic earnings …

Antitrust For Dominant Digital Platforms: An Alternative To The Monopoly Power Standard To Restore Competition, Jordan Ramsey

Senior Honors Theses

Antitrust law is meant to promote competition by prohibiting anticompetitive business practices such as mergers and acquisitions as well as exclusionary conduct. Judicial interpretation of antitrust law has allowed dominant digital platforms to undertake anticompetitive actions without prosecution. The Sherman Antitrust Act should be amended to remove the monopoly power standard that allows firms to engage in anticompetitive conduct as long as the conduct does not create or uphold monopoly power. The amendment would make anticompetitive conduct illegal regardless of monopoly power, as long as six proof requirements are met. This would result in lessened market concentration, which would benefit …

Driving Forces Of Mining Outsourcing: Evidence From China, Bingxu Zheng

Dissertations and Theses Collection (Open Access)

The outsourcing of services by mining enterprises has become a significant global trend. Classic studies have demonstrated that outsourcing can help enterprises obtain professional services, improving productivity and reducing production costs. However, as a transitional economy, China has its unique characteristics regarding the driving forces of service outsourcing. By employing a case study method, one mining service outsourcing provider, and five mining enterprises' interviews and archival data, this study constructs a theory to identify the driving forces and mechanisms of mining enterprises' choice of service outsourcing and a logic relationship between variables via a diagram.

The case study results reveal …

Is Anything Left Of The Debate About The Sources Of Growth In East Asia Thirty Years Later?, Jesus Felipe, John Mccombie

Angelo King Institute for Economic and Business Studies (AKI)

The year 2023 commemorates the 30th anniversary of the publication of the influential, yet controversial, study The East Asian Miracle report by the World Bank (1993). An important part of the report’s analysis was concerned with the sources of growth in East Asia. This was based on the neoclassical decomposition of growth into productivity and factor accumulation. At about the same time, the publication of Alwyn Young’s (1992, 1995) and J-I Kim and Lawrence Lau’s (1994) studies, and Paul Krugman’s (1994) popularization of the “zero total factor productivity growth” thesis, led to a very important debate within the profession, on …

Natural Disasters And Corporate Philanthropy: A Double Movement Perspective, Guoguang Wan, Heli Wang, Xuesong Geng, Kenneth G. Huang

Research Collection Lee Kong Chian School Of Business

This study examines Chinese corporations’ responses to a sudden natural disaster in terms of their philanthropic donations. We apply Polanyi’s double movement perspective to argue that rapid market expansion in an emerging economy causes social problems such as large-income disparities and environmental degradation. This calls forth counterforces advocating social responsibility and sustainability. Such countermovements can be strengthened by a major disaster, especially in the domain of corporate philanthropy. The resulting increase in corporate philanthropy persists long after the disaster, especially for those firms with large intra-firm pay disparities, operating in socially contested industries and located in regions with more social …

United States Of America As The Global Steward, Grant Fuller

Liberty University Journal of Statesmanship & Public Policy

The principle of subsidiarity states that local communities are best equipped to govern most of their affairs. In an increasingly connected world, this idea gets contested frequently. Since World War II, the world has experienced relative peace due to U.S. precedence. Today, we see U.S. leadership challenged by global players like China, which is doing so in a manner that prioritizes their people and goals. In order to maintain relevance, the United States must revisit trade policy, monetary policy, fiscal policy, and national security policy.

Ijv’S Political Ties And R&D Strategy: Asymmetric Contingencies Of Market Versus Governmental Policy Turbulence, Jie Yang, Jeiqiong Ma, Harold Doty, Jeoung Yul Lee

Management Faculty Publications and Presentations

The purpose of this article is to empirically explore (1) the impact of political ties on international joint ventures’ (IJVs) R&D strategy and (2) the moderating effects of market turbulence and governmental policy turbulence on the relationship between IJV political ties and R&D investment in China. Our sample consists of 1,344 observations taken from 224 IJVs over a period of 6 years (2012–2017), and we applied hierarchical moderated regression analysis (HMRA) with panel data to analyze our three hypotheses. Our findings show that IJVs with political ties tend to invest more in R&D than their counterparts without political ties. Interestingly, …

Corporate Foreign Policy In War, Kishanthi Parella

Scholarly Articles

On February 24, 2022, Russian troops invaded Ukraine. Over a year later, the war has claimed tens of thousands of lives and led to the displacement of millions. In Spring 2023, both Ukrainian and Russian forces prepared new offensives, while the United States committed to providing Ukraine with military tanks—a move that Russian officials had previously warned would constitute direct involvement in the war. While countries debated how to respond, we also witnessed the privatization of foreign policy as hundreds of companies around the world similarly sought to assist Ukraine or punish Russia using the tools of national foreign policy—humanitarian …

Information Sharing Between Mutual Funds And Auditors, Ole‐Kristian Hope, Pingui Rao, Yanping Xu, Heng Yue

Research Collection School Of Accountancy

This paper examines whether there is information sharing between mutual funds and their auditors about the auditors’ other listed firm clients. Using data from the Chinese market, we find that mutual funds earn higher profits from trading in firms that share the same auditors. The effects are more pronounced when firms have a more opaque information environment and when the audit partners for the fund and the partners for the listed firm share school ties. The evidence is consistent with information flowing from auditors to mutual funds, providing mutual funds with an information advantage in firms that share the same …

Postmaterialism And Corporate Tax Avoidance, Jiwei Wang, Jiwei Wang, Kangtao Ye

Research Collection School Of Accountancy

Using a proprietary dataset of China tax audits, we found that firms owned by investors from countries with higher postmaterialism values were less likely to engage in tax-avoidance behavior in China. In addition, we found some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further used a cross-country sample from 21 countries over 22 years. The evidence from the cross-country sample was consistent with the findings obtained from the China …

Employer Branding In The Healthcare Sector: The Role Of Instrumental And Symbolic Image Attributes Among Potential Applicants And Doctors, Jiaxin Luo, Aristides I. Ferreira, Filip Lievens, Beatriz R. Trigo

Research Collection Lee Kong Chian School Of Business

This study draws from the instrumental-symbolic framework to analyze the employer image of public hospitals among final-year students and employed doctors. We examine the relative importance of perceived instrumental and symbolic employer image attributes in public hospitals in China among two groups of individuals (211 final-year students and 200 currently employed doctors). Both instrumental and symbolic attributes are significantly related to hospitals' attractiveness as an employer. Symbolic trait inferences explain incremental variance in employer attraction beyond instrumental attributes. Although both attributes explain similar portions of the variance in the two groups, the attributes that emerge as significantly related to hospitals' …